Daniela Is a 25percent Partner in the JRD Partnership

question 37

Multiple Choice

Daniela is a 25percent partner in the JRD Partnership. On January 1, JRD makes a proportionate distribution of $25,000 cash, inventory with a $17,400 fair value (inside basis $8,700) , and accounts receivable with a fair value of $8,700 (inside basis of $13,050) to Daniela. JRD has no liabilities at the date of the distribution. Daniela's basis in her JRD Partnership interest is $28,050. What is Daniela's basis in the distributed inventory and accounts receivable?

• A) $1,525 inventory, $1,525 accounts receivable.
• B) $8,700 inventory, $13,050 accounts receivable.
• C) $0 inventory, $4,350 accounts receivable.
• D) $17,400 inventory, $8,700 accounts receivable.

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Definitions:

Balance Sheet

An illustrative financial document that covers a company's assets, liabilities, and the equity interest of shareholders on a given date.

Statement of Stockholder's Equity

A financial statement that shows the changes in the value of a company's equity over a reporting period.

Balance Sheet

A detailed statement reflecting a company's tangible assets, owed liabilities, and shareholder equity at a particular time.

Income Statement

A financial statement that shows a company's revenue and expenses over a specific period, usually a fiscal quarter or year.